On balance sheets, long-term capital leases are treated as
A) debt.
B) equity.
C) contingent liabilities.
D) as "off balance sheet" financing.

Question

Quizplus · Accepted Answer

Long-term capital leases are treated as debt because they represent a long-term obligation to make lease payments in the future, similar to a loan. They are recorded as a liability on the balance sheet and the corresponding asset (leased property or equipment) is also recorded.

On Balance Sheets, Long-Term Capital Leases Are Treated as